Rise in Crypto Scams- PlusToken May Still Affect Bitcoin’s Price


April 18, 2020 4:22 pm

Rise in Crypto Scams- PlusToken May Still Affect Bitcoin’s Price
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PlusToken is not responsible for the recent Bitcoin price crash, however, they may still affect the market, as scam activities are on a peak between the pandemic.

Scams continue to be dominant in the cryptocurrency world, supported by the new coronavirus pandemic; scammers are taking advantage of desperate times and desperate people with scams from malware to fake investment programs and even fake donations to health organizations.

PlusToken, one of the most popular scams in the industry has come under the spotlight again after the rumours arose that the March crash was caused by its operators selling their stolen Bitcoin (BTC).

Research by a blockchain analysis company- Chainalysis, The “Black Thursday” selling-off of March 12 was not caused by PlusToken. Chainalysis tried to clarify the impact of the COVID-19 pandemic on cryptocurrency markets by explaining key points on-chain data such as exchange inflow and more, in a recent webinar.

During the presentation, the chief economist of Chainalysis, Philip Gradwell covered a moderately common opinion that the crypto market crash that happened March 12 to March 13 was caused by PlusToken gained through its Ponzi scheme by liquidating the Bitcoin, which was around $2.9 billion according to Chainalysis. In the webinar, Gradwell said: 

“We can also dispel another theory that has been going around, that PlusToken […] selling triggered the price decline. We actually don’t think that’s the case because PlusToken had largely cashed out before early March.”

According to Chainalysis data, PlusToken movements to exchanges declined critically before the crash, which means funds were already cashed out. 

On Feb. 12, a Huge amount of 12,423 Bitcoin, worth $123 million at the time, was transferred to a mixer or cold wallet, followed by a comparable amount in early March. Probably the Bitcoin was cashed out immediately to avoid exchanges freezing funds.

Source: Chainalysis

Is This The End Of PlusToken?

Per a report released on March 10, by OXT Research, PlusToken may still have 61,229 Bitcoin of worth around $420 million. 

While some Bitcoin has been traded after the crash, low prices of Bitcoin seem to discourage PlusToken from selling, if they are still, in fact, holding such large quantities of Bitcoin. It’s logical that the PlusToken operators may be waiting for the Bitcoin price to get higher.

Volumes prior to and during December 2019 were much higher than those observed in 2020 per Chainalysis. The increased inflows were explained in another Chainalysis report which described another opinion on the PlusToken and Bitcoin price relation, affirming that at the time the sell-offs of PlusToken were keeping Bitcoin prices down.

Even though PlusToken has largely cashed out, there is still a chance it will continue to affect Bitcoin. According to the head of research at Chainalysis- Kim Grauer, a large sell-off by PlusToken could take down the price of Bitcoin in the future, exceptionally if liquidations are performed irresponsibly.

COVID-19: Rise in Crypto Scams 

According to a report by DappRadar observed peak activities during last month that interest-generating products like MakerDAO’s decentralized protocol and additional centralized options such as BlockFi’s banking app or Binance’s lending services have been getting even more popular in the crypto market. 

Although crypto has always been inclined to illegal action and shady investments, the comparatively high-interest rates practised in these services may have improved normalize PlusToken’s profit claims, helping careless investors.

Similar patterns have been observed earlier, a cryptocurrency wallet project from Nigeria called Satowallet allegedly made off with $1 million in a smaller-scale exit scam, in August 2019. Last year, another Ponzi plan assuring returns from cloud mining also created headlines after pulling off a $200 million exit scam that later followed by 14 individuals being arrested. 

An ever-increasing number of “topical” crypto-schemes have appeared since the coronavirus pandemic started, from fake donation campaigns for the World Health Organization and the United States Centers for Disease Control and Prevention to fraudsters representing officials from these agencies who can exchange information on current viruses for a price, funded with Bitcoin of course.

The U.S. FBI recently issued a press release in which it cautioned of the potential increase of “cryptocurrency-related fraud schemes” during the COVID-19 pandemic, adding:

“There are not only numerous virtual asset service providers online but also thousands of cryptocurrency kiosks located throughout the world which are exploited by criminals to facilitate their schemes. Many traditional financial crimes and money laundering schemes are now orchestrated via cryptocurrencies.”

Although hard times build a perfect uncontrolled environment for scammers to operate, it’s comforting to know that notwithstanding the increased activity and novel coronavirus-related scams, revenue for crypto scammers decreased by about 30% in March.

Source: Chainalysis
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